Tough Times for Bloomberg Terminal

Bloomberg L.P. looks like it’s going to come a cropper and suffer from the decision taken by nine Wall Street firms to find an alternative to its chat-messaging network, the Bloomberg Terminal. The terminal allows real-time analysis of data from the markets and allows access to an electronic trading platform.  Up until now, Bloomberg has largely had a monopoly over such a system, but that looks like it’s set to change.

Thomson Reuters and Markit have been involved in discussions and might have closed a deal involving Barclays, Citigroup and JPMorgan Chase as well as Deutsche Bank and Goldman Sachs. All have agreed to take full advantage of the new system when it is launched in a growing crisis of confidentiality and over-pricing of the Bloomberg terminal that leaves banks dependent.

The new system will enable banks to chat with partners across the globe in vital closed network discussions that have been limited to the Bloomberg terminal until now. The reason for the need to develop a new system that takes into consideration the privacy needs of the bank involved in using the system? Simply, yet another hacking scandal whereby Bloomberg journalists have been accused of listening in on conversations and gleaning data from discussions in a bid to get the news out there faster and be at the top of the scoop list. There is a never ending race for fast and accurate information in today’s digital age. The press and TV companies are prepared to go to any extent to make sure that they get the top stories.

Complaints grew as to there being no alternative solution to the monopoly held by Bloomberg. Plus, the terminals offered to banks have a hefty bill that amounts to $20, 000 per annum. Bloomberg has everyone tied in, since if you want to chat you need to have the same system, so everybody ends up using the Bloomberg one.  Bloomberg has tried to scupper criticism of its service by making sure that sensitive information (like last log-in times) are no longer available to journalists and remain secret. Last Friday saw the appointment of I.B.M.’s former CEO, Samuel J. Palmisano in a bid to come clean and improve its policies, fearing the worst is to come: that they may actually lose control of the market. Banks seem to have had enough however with the growing reliance on one company and the problems that this may entail.

There were some 300, 000 subscribers around the world to the Bloomberg system and that means that if they don’t clean up their act, they will be losing a lot of business. But, perhaps it’s already too late. Financial markets rarely forgive and never forget!  It didn’t seem to be an issue that the terminals cost so much money back in the good old days of the bull markets prior to the financial crisis. But, these days, banks are cautious and warily invest so much money in systems that don’t provide them with complete privacy.

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